Inheritance Tax Research Articles

Designing an acceptable and fair carbon tax: The role of mental accounting

Despite its potential for curbing greenhouse gas emissions, carbon taxation encounters strong public resistance. However, acceptability depends on how tax revenues are used. We test the hypothesis that mental accounting theory can both explain systematic patterns in citizens’ preferences, such as the support for environmental earmarking, and help design a carbon tax scheme that is both acceptable and fair. Across six experiments conducted in the United Kingdom and in France (Ntotal = 7100), we show that: (a) There is an acceptability boost when the use of tax revenues matches the tax domain thematically (e.g., allocating carbon tax revenues to green projects), as demonstrated by an interaction effect between the tax domain and the expenditure domain on the level of tax support. This result is consistent with the use of a mental accounting heuristic, by which people create mental budgets where the origin of revenues is matched thematically with their domain of use. (b) Carbon tax acceptability varies with the proportion of tax revenues earmarked for green projects. (c) A mixed carbon tax scheme, in which most revenues are earmarked for green projects and the rest is redistributed to low-income households to be spent on sustainable expenses, receives most support among the tested options. We also demonstrate the robustness of the mental accounting heuristic in two ways: by showing that the preference for environmental earmarking of carbon taxes is observed across all relevant subsections of the population, and that mental accounting also appears to shape preferences for health-related earmarking of tobacco taxes, and social-related earmarking of inheritance taxes.

Determinants of inheritance and gifts taxation in the European Union

Abstract Inheritance and gift taxation vary widely among countries in both the design and tax burden. We analyze the impact of a series of factors, such as the country’s affluence, political preferences, preferences for equity, aging ratio, fiscal standing of the state, and the country’s size, on inheritance tax systems. The applied methods involve the random effects ordered logistic regression for tax design and tobit correlated-random effect models for tax revenues. We find that inheritance tax design is mainly determined by demographic factors while tax revenues depend on a broader group of factors including political orientation of a state, condition of an economy, and the size of a country. Higher preferences for equal distribution and commitment to democratic norms are associated with higher tax revenues. Good economic condition of the state boosts revenues, as does country’s higher population. The results shed some light on future evolution of inheritance taxation.

상속세 및 증여세법상 시가인정액의 적정성 평가: KB선도아파트50을 사례로

상속세 및 증여세법상 시가인정액의 적정성 평가: KB선도아파트50을 사례로

Rethinking capital and wealth taxation

Abstract This paper reviews recent developments in the theory and practice of optimal capital taxation. We emphasize three main rationales for capital taxation. First, the frontier between capital and labour income flows is often fuzzy, thereby lending support to a broad-based, comprehensive income tax. Next, the very notions of income and consumption flows are difficult to define and measure for top wealth holders where capital gains due to asset price effects dwarf ordinary income and consumption flows. Therefore the proper way to tax billionaires is a progressive wealth tax. Finally, as individuals cannot choose their parents, there are strong meritocratic reasons why we should tax inherited wealth more than earned income or self-made wealth for which individuals can be held responsible, at least in part. This implies that the ideal fiscal system should also include a progressive inheritance tax, in addition to progressive income and wealth taxes. We then confront our prescriptions with historical experience. Although there are significant differences, we argue that observed fiscal systems in modern democracies bear important similarities with this ideal triptych.

Revenue, Redistribution, and the Rise and Fall of Inheritance Taxation

Why do countries repeal the inheritance tax? To investigate this question, we use a novel dataset on inheritance tax introductions and repeals worldwide. We argue that revenue requirements are the main determinant of repeal risks: The inheritance tax is resilient as long as it is central to the national revenue system; it becomes vulnerable to attacks once the rise of more efficient tax instruments marginalizes its revenue contribution. Devoid of fiscal purpose, its survival depends mainly on its redistributive features. Redistribution, however, is essentially contested and should be more important in democracies. The evidence is in line with our conjecture: The likelihood of inheritance tax repeal increases as other more buoyant taxes rise and non-democracies are more likely to repeal the tax than democracies.

Age‐ and health‐related non‐linear inheritance taxation

AbstractThis paper studies the design of optimal non linear bequest taxation when individuals differ in wage, survival and probability to become dependent at the old age. Following the recent health and economic literature, we assume that agents with higher wage have higher survival chances and lower risks to become dependent. Agents make precautionary savings for their old age taking into account the uncertainty on their health. They exhibit joy of giving utility, so that they also set aside money for their heirs. In the absence of annuity and long‐term care (LTC) insurance markets, heirs obtain different levels of bequests, depending on whether the donor died early or late in life and whether he was healthy at time of death. We assume that the government does not observe the decomposition of bequests between voluntary and involuntary ones. Instead, it observes the timing of death and the health condition at death of the donor. We show that, under asymmetric information, on top of marginal income taxation, the bequests left by low‐income individuals in case of early death should be taxed at the margin. To the opposite, bequests obtained later in life need not be taxed or subsidized at the margin.

Barriers and Enablers of Long‐term Land Leasing: a Case Study of Northern Ireland

SummaryLong‐term land leasing offers a viable alternative to land ownership in relation to increasing efficiency of agricultural production, economies of scale, and delivering environmental improvements in terms of land management. However, with no significant tenanted sector in Northern Ireland, access to land via long‐term land leasing is limited. This study analysed the barriers and enablers of long‐term land leasing. To achieve our objective, we employed a mixed methods approach. The results show that the main barriers to long‐term land leasing were environmental concern (around how the land will be managed), inheritance tax implications and the potential effect of long‐term land leasing on future succession plans of the farm business. We also found that as much as 70 per cent of the farmers surveyed believe the inclusion of a ‘break clause’ and the introduction of income tax incentives will encourage the adoption of long‐term land leasing, while 61 per cent of the farmers stated that the environmental management of the land will encourage long‐term land leasing. The study concluded that any model designed to encourage long‐term land leasing in Northern Ireland should include clauses which cover the environmental management of the land and break clauses. Income tax incentives for landowners could also be considered.

A reconsideration of the economic decline of the British aristocracy 1858–2018

Abstract Historical accounts of the British aristocracy argue its economic decline was owed to anachronistic characteristics, declining land values, and inheritance taxes. We find disconfirming evidence based on the hereditary peerage's probates 1858 to 2018, showing: decline only began after World War I; no links between aristocratic wealth and farmland prices; and a greater role for tax avoidance with respect to inheritance taxes. Aristocrats also followed the rich with their share of wealth dwindling over the 20th century. Together, these arguments suggest the British aristocracy detached economic interests from status characteristics enabling them to persist more effectively than previously thought.

상증세법상 비거주용 부동산 시가 평가를 위한 감정평가의 적법성

Non-residential real estate (called “Little Building”) is difficult to calculate the market price, unlike apartment houses where the market price can be easily found. If it is difficult to find the market price, the Inheritance and Gift Tax Act stipulates that the standard market price should be applied as a supplementary evaluation method, which is significantly different from the market price generally traded in the real estate market. When taxpayers inherited and donated non-residential real estate, there were many cases in which the tax office calculated and taxed the market price through appraisal, and the taxpayer filed complaints and lawsuits in a number of cases. The lower court recently ruled that it is illegal for the tax office to select an appraisal target according to arbitrary standards and tax it based on the appraisal amount. This paper examined the real estate market price evaluation regulations under the Inheritance Tax and Gift Tax Act, reviewed the meaning of the appraised value recognized as the market price in relation to the tax equality principle. It is desirable for both taxpayers and tax office to recognize the evaluation amount of real estate assessed at the tax stage as the market price, and as of June 2023, the National Tax Service's revised inheritance tax and gift tax regulations introduced the criteria for evaluating non-residential real estate.

Belgian court of appeal rules on inheritance tax treatment of a distribution by a Liechtenstein foundation

Abstract In a judgment of 5 April 2022, the Court of Appeal of Ghent ruled on a case regarding the qualification of a distribution by Liechtenstein Stiftung under Belgian inheritance taxation. While the constitution of and the transfer of assets to a private foundation, or even a distribution by a private foundation after the death of the founder normally does not trigger Belgian inheritance taxation, the Court ultimately ruled that the distributions should be subject to inheritance taxation, based on the (perceived) existence of an ‘agreement’ between the wife of the founder, who was designated as the ‘first beneficiary’ and the second beneficiaries. This judgment raises a number of questions regarding the correct interpretation of the relevant Belgian tax provisions and the correct application of the applicable Liechtenstein legislation. This article provides an in-depth assessment of this judgment and serves as a cautionary tale for any private foundation which has a founder and/or beneficiaries resident in Belgium.

Inheritance Tax- Its Desirability and Impact on Reducing Economic Inequality in India

Inheritance Tax- Its Desirability and Impact on Reducing Economic Inequality in India

Re-Evaluating the Major Factors in the Low Origination Rate of the Reverse Mortgage Market

We reinvestigate the major factors in the low origination rate of home equity conversion mortgages (HECMs) in the United States from 2010 to 2017. We use panel data analysis to consider the variation in time and region and investigate the main determinants of the HECM origination rate. We examine five categories of variables: demographics, home equity, home debt level, retirement income, and taxes. We first filter out key variables and then consider the interactions among these factors. The empirical outcomes confirm the significance of including interactions and provide detailed observations to resolve several disputed issues and make policy recommendations, such as debt priority of mortgage and credit card, applying HECM as a personal or household decision, and the dominance of property tax over inheritance tax.

2022년 주요 상속세 및 증여세 판례회고

There are five major Supreme Court precedents related to inheritance and gift taxes for 2022. In this article, the above five precedents were divided into facts, issues, the position of the Supreme Court, and the significance and evaluation of the judgment in chronological order.
 First of all, the Supreme Court's ruling on March 11, 2022, on whether to invalidate the enforcement ordinance related to Article 41 (1) of the former Inheritance Tax and Gift Tax Act, reaffirmed the position of the Supreme Court's ruling of 2015Du45700 on April 20, 2017 and the Supreme Court's decision of 2019Du35695 on September 9, 2021. The above judgment is valid in that the scope of gifts through corporations is limited through interpretation. However, it is necessary to review whether it is right to follow the materiality and clarity test of the illegality of administrative disposition.
 Second, the Supreme Court's ruling on the taxation and additional tax on the deeming property registered in name of another person to have been donated related to the acquisition of new stocks on September 15, 2022 is about the legal interpretation of the old tax and gift tax law in which the gift tax payer was in principle a trustee at the time of title trust. The target judgment judged that the case in which the title truster acquired new shares as collateral and transferred them under the same person's name, but before the transfer was made, the case in which the loan was repaid with the sale price of the existing title trust shares was not different. From the perspective of sanctions on the total amount of property that is difficult to grasp by title trust, it must be judged as the subject judgment. In addition, it was confirmed for the first time that the subject judgment should be based on the name trustee to determine whether the additional tax is imposed based on the taxpayer. If the above logic is applied to the current tax increase law, it should be judged based on the title truster who is liable for tax payment.
 Third, the Supreme Court's 2022Du33712 ruling on the scope of cancellation of disposition on May 26, 2022 reaffirms the previous precedent (Supreme Court March 28, 1997) that only the portion exceeding the legitimate tax amount should be canceled if the lawsuit for cancellation of the tax disposition exists. It is reasonable in that there is no need to appeal again for parts that exceed the legitimate tax amount.
 Fourth, the Supreme Court's ruling on November 10, 2022, 2020Du52214 is a precedent on whether to recognize self-gifts related to Article 45-3 of the former Inheritance Tax and Gift Tax Act (before amended by Act No. 13557 on December 15, 2015). The above ruling is the first case in which the donor and the recipient cannot be said to be the same, even though the controlling shareholders of the beneficiary corporation are shareholders of a related corporation at the same time. Given that agenda regulations that are disadvantageous to taxpayers need to be interpreted in a limited way, it is necessary to review whether the above judgment is correct.
 Finally, the Supreme Court's decision on December 29, 2022 on the method of calculating gift profits according to the comprehensive exchange of stocks followed the previous precedent (the Supreme Court's decision on March 29, 2018) that gift taxes should be levied by applying Article 42 (1) 3 of the former Inheritance Tax Act. In addition, the target judgment clarified the application of Article 31-9(2)5(b) of the Enforcement Decree of the former Inheritance Tax Act (before amended by Presidential Decree No. 20621 on February 22, 2008), which is the basis for calculating the gift property value of a company that becomes a full subsidiary due to stock exchange.

공정거래법의 기업결합 사전신고 기준과 관련한 회계적 사안

[Purpose]In Article 11 ② of the Korea Fair Trade Act, the total amount of consideration in exchange for a business combination is presented. However, there is no clear criteria for measuring and evaluating the consideration. Therefore, this study aims to analyze Article 11 ② of the Fair Trade Act from an accounting point of view and propose improvements to the Act.
 [Methodology]Overseas legislative cases (U.S.A., Germany, Austria, EU), Korea International Financial Reporting Standards, Korea Inheritance and Gift Tax Act were investigated.
 [Findings]First, the Fair Trade Act needs to be diversified and specified by the types of transaction consideration. In addition, it is necessary to organically link the Fair Trade Act and accounting standards by using the concepts suggested by K－IFRS when measuring the consideration amount. Second, the Fair Trade Act needs to be clear criteria for measuring the transaction amount. Third, the fair value criteria should be applied firstly to the transaction amount, and if the fair value is unclear, the evaluation standards under the Inheritance and Gift Tax Act should be applied.
 [Implications]This paper has an implication that the Korea Fair Trade Act, which has been mainly studied in law, was analyzed from an accounting point of view. Through this, it is meaningful that the applicability of the Fair Trade Act has been increased, and the possibility of harmonization with the accounting has been increased.

Addressing the rise of inequalities: How relevant is Rawls's critique of welfare state capitalism?

Addressing the rise of inequalities: How relevant is Rawls's critique of welfare state capitalism?

A Framework for Income, Inheritance, and Wealth Tax in America amid Increasing Income Inequality when the Richest are Leaving even the Rich Far Behind

A Framework for Income, Inheritance, and Wealth Tax in America amid Increasing Income Inequality when the Richest are Leaving even the Rich Far Behind

Prospects for the development of taxation of individuals in Russia, taking into account advanced foreign experience

This study is devoted to the search for advanced foreign experience in differentiating the tax burden of individuals and determining the directions for its implementation in Russia. The article consists of three thematic blocks: the first is devoted to assessing the tax burden of individuals in the Russian Federation, the second contains a description of foreign experience in taxing the population, and the third contains directions for improving domestic taxation. Based on the analysis of foreign experience in taxing individuals, methodological tools have been identified to ensure the differentiation of the tax burden (diversification of fiscal units; the use of a progressive scale; new fiscal institutions; tax deductions and tax credits; taxes on inheritance and gift; taxes on wealth and luxury). The tools that can be implemented in domestic practice have been identified: taxation of inheritance and donation; expanded application of elements of family taxation for socially oriented tax deductions; differentiated approach to tax administration of property and income taxes levied on individuals. In addition, methodological approaches to the administration of taxes from the population have been formed, based on the following criteria: calculation of tax liabilities; source of information on tax liabilities; the moment of granting tax benefits (preferences); frequency of payment of taxes; the possibility of hiding the object of taxation. The practical significance of the study lies in the possibility of using its results in the development of tax policy measures.

A Study on the Ownership and Enforcement of Insurance Contract Non-Forfeiture Value: From the Inheritance Tax

A Study on the Ownership and Enforcement of Insurance Contract Non-Forfeiture Value: From the Inheritance Tax

Russian tax policy under sanctions pressure: theoretical approaches and alternative directions for practical implementation

The article examines the theoretical and methodological issues of building the tax policy of the state in the face of overcoming the negative consequences of the sanctions pressure of the collective West and the United States. We presented the results of the analysis of external and internal factors influencing the implementation of the state tax policy. We have formed five groups of external factors that are most relevant for tax policy in the context of sanctions pressure in the present period of time (the significance of sanctions pressure; the objective need for a significant increase in budget revenues in the context of the military operation; the need for comprehensive support for organizations of the military-industrial complex; ensuring the technological sovereignty of the country; electoral campaign 2023-2024). Based on a generalization of Russian taxation practice in 2014-2021, we have identified the most effective tax tools to counteract the negative economic consequences of sanctions pressure on Russia. The result of the study was the substantiation of the feasibility of an alternative solution to the issue of switching to a progressive personal income tax as a tool to increase budget revenues and equalize income inequality between the rich and the poor. Two possible approaches to the implementation of the tax maneuver in the field of taxation of the population are argued. This is a revival in the Russian tax system of the previously levied (1992-2005) inheritance and gift tax, taking into account modern realities. We have shown the relevance of raising the VAT rate as a tool for transferring part of the tax burden from the population's income to their expenses (consumption).

미술품 시가감정 인력(art appraiser) 양성을 위한 탐색적 연구

This study explored a direction for developing professional art appraisers based on related literature reviews and qualitative interviews, in order to strengthen art appraisers’ reliability and ensure the art market’s sustainable growth. Art appraisal is a specialized area, which is distinct from authentication, and it requires that personnel be systematically educated and trained based on specific qualifications. Institutionally (e.g, the recently introduced system for the payment-in-kind with artwork·cultural heritage for inheritance tax), reliable practice of art appraisal is becoming more imperative, and professionalization is being discussed in Korea. Against this background, as a result of exploring research problems for fostering art appraisers through in-depth interviews with 12 experts, opinions on the demand for art appraiser manpower, job title·duty·competency, manpower training plan, and the role of the government, industry, and academia were summarized. After evaluating advanced cases from overseas, as well as in-depth interviews with domestic experts, suggestions for professional development of art appraisers were discussed in 6 areas as follows: (1) specific demands and premises for fostering art appraiser; (2) unifying the professional title of ‘art appraiser’; (3) establishing terms and practical guidelines for art appraisal; (4), step-by-step and systematic curriculum design based on job and competency; (5), introduction of an official licence system; and (6) finally, the complementary and cooperative roles of government, industry and academia. The significance of this study lies on suggesting a direction for fostering professional art appraisers in Korea based on empirical data while the theoretical bases of art appraisal and the academic research on it are yet insufficient.